Mr. Money Mustache, the man who retired at 30, takes reader questions

To hundreds of thousands of devotees, he is Mister Money Mustache. And he is here to tell you that early retirement doesn't only happen to Powerball winners and those who luck into a big inheritance. He and his wife retired from middle-income jobs before they had their son. Exasperated, as he puts it, by "a barrage of skeptical questions from high-income peers who were still in debt years after we were free from work," he created a no-nonsense personal finance blog and started spilling his secrets. He is Pete (just Pete, for the sake of his family?s privacy). He lives in Longmont, Colo. He is ridiculously happy. And he's sure his life could be yours.

Pete will be online Friday at 11 a.m. to live chat with readers. This is your chance to get some advice! Ask him your personal finance questions, or about how he saved his money so quickly.

Just wanted to say Hi to Mr. Money Mustache and thank you! Since the article ran in the Post I have devoured the MMM archives. Although we are not trying to retire any time soon, your simple message has me rethinking what's really important to me and my family. I have long felt uncomfortable with our consumerism without being able to put my finger on why.

A: Mr. Money Mustache

Thanks very much! That is a good point: although I love to write about early retirement, the blog is really about living a better life, which comes in part from letting go of materialism a bit. Even if you never want to retire, you can live better by shopping less and living more.

Hi there,
Great work on your blog, BTW. Many of your posts on rethinking how you look at the world, habits, and giving your readers the confidence to be Outliners are fantastic.
Do you believe you have many readers, who, like myself love what they are doing professionally and have no intention of "retiring" (even your definition of it) anytime soon? Maybe even readers living very different lives than your own, and spending differently, but frugally? For example, we leverage many of your great insights to not living the American Dream based on stuff ( but we do spend money (at upscale thrift stores) on necessary business attire, iPhones, Macbook, travel for business, and hair/make-up. Is it the the power of having the mindset that you also do, but living and spending based on our goals and values that contributes to your large readership?

A: Mr. Money Mustache

I sure hope so! It is true that there are so many different lifestyles available that following one like a prescription would be meaningless to most people. For example, we have only one child while others have more, or zero. We're 38, which is very different from 19 or 65.

But people in all situations (and most countries), can all benefit from the idea that when it comes to lifestyle inflation, less is often more.

While I appreciate your philosophy and have tried to implement some of your recommendations into my own life, I believe that it only works in moderation. My spending is somebody else's savings. If my boss decides to do the work that I do for him in order to be more "mustachian", it will be very difficult for me to implement the lifestyle that you recommend because my income will have fallen. Likewise, for someone who lays off a house cleaner in order to save money. Do you believe that, somewhat paradoxically, there are limits to your philosophy and that a modern economy requires a certain amount of non-mustachianism in order to allow for mustachian behavior?

A: Mr. Money Mustache

This is a common criticism of thrift and savings in general. But from an economics perspective, you can balance the lack of demand with a lack of supply and still end up in a happy situation. If we all reduced our demand for consumption, but also reduced our desire to PRODUCE (i.e., shortened our workweeks or retired earlier), we could have better lives.

In fact, by saving and investing more, you provide more capital for new business creation (and displace the need for the government to do it), which can actually boost innovation. Economists tend to repeat the phrase 'capital is always scarce'.

I enjoy your philosphy and could retire myself at 44, but for potential health care costs. How do you address that problem? And will Obamacare affect you one way or the other?

A: Mr. Money Mustache

Our family's health insurance costs $237 per month, which is fairly affordable. With pre-existing conditions, health care out-of-pocket costs can be much more, of course. But Obamacare tends to flatten the curve a bit, covering pre-existing conditions less expensively.

From my perspective, Obamacare will probably raise my base high-deductible insurance cost slightly, in exchange for greatly reducing the risk of getting dropped by the insurance company in the event of actually making a claim someday. It also eliminated the nasty "lifetime maximum" that was hidden in many policies. More on insurance here.

What are the characteristics of a location when planning early retirement? Is America the best place for pre-early retirement?

A: Mr. Money Mustache

I am pretty inexperienced in this area, as I've only really lived in two countries so far. The US is definitely favorable, because it combines great variety in incomes and living locations, with low taxes. But many more adventurous people prefer to combine a US-style income, with living in Thailand or Mexico or other lower-wage countries, where the same money goes even further.

One of my points, however, is that raising your material standard of living (having a cook and maid, for example), doesn't make you any happier, so living in the US with even a below-average level of spending is still a great life.

When I retire, I hope to have a large sum of money in the bank and other investments to provide a steady income. If I understand correctly, most of your income comes from a rental house. Isn't that risky? I have a friend who lost a pretty penny with a rental property. They require regular maintenance and just a few months without a renter can quickly eat up the profits for the year. (Yes, he was still paying a mortgage on the property)

A: Mr. Money Mustache

I agree - for some people who want an effortless retirement, stocks or other fully passive investments are best. For others who enjoy it, rental houses (in the right city) can provide a much higher return on investment, even after accounting for maintenance and paying someone to manage it for you. In my case, I like renting out and renovating houses even though I could sell it and live off of stock dividends instead. In fact, I'm even shopping for another one, just for the thrill of contributing to my old neighborhood by fixing up more of the houses.

After reading the article about you, I starting reading your blog. My family is living well below our means, and saving aggressively, but the one big thing you suggest that we aren't doing is biking. Mainly because I run most errands with my three kids...all still on training wheels/tricycle, but too big to fit all three in a trailer. Do you have any suggestions for biking with multiple kids?

A: Mr. Money Mustache

Excellent biking attitude! One trick some people in my neighborhood do is to put the oldest kid on one of those tag-along bike fittings (I have one called the Novara Afterburner), and tow a trailer behind that. It is fun, and gets lots of positive attention. I bet a 4-passenger bike trailer would be a great startup business idea. And, of course, soon enough your kids will be old enough to ride alongside you.

I paid off my car last year. That is $400/month that I am not currently spending. While, I could look at that as an excuse to cut back my work schedule to enjoy an extra day off each week, I know that my car won't last forever. Some day, it will need to be replaced. Sure, I can buy used, but I will need more money that my car will be worth to pay for it, something that would not be possible if I decreased my income by the $400/month that I am "saving" by driving my car after it has been paid off. The only way that I will stay even or get ahead is if I save that $400/month and have $6000-8000 in cash to pay for my next car.

A: Mr. Money Mustache

Agreed! There are two ways to get more free time: take time off from work whenever you can afford it, as you describe here. Or, work really hard and invest the surplus, so this money starts generating money for you. That is the route I recommend, because it means you eventually become free from the need for mandatory work.

But in your position, you can get ahead by not owning such an expensive car! Even now, I have a car worth only about $6k, because even that is more than I need to get around. Cars can be real wealth-destroyers, especially if you're not yet financially established.

To me, someone who retires, quits their job and stops working. Managing a rental property, writing, and doing odd jobs, isn't quite a retirement. While, that may be better than working a fulltime job that helps the person who owns the company get rich.

Seriously though, early retirement is often different than traditional retirement. When you are young and financially independent, the last thing you want to do is sit around and do nothing all day. So you take up hobbies. Some of these happen to produce money, while others don't. I couldn't imagine a better concept of retirement!

But luckily, the choice is up to you - with financial independence, you really can sit around and not work if you like. My ability to pay the bills doesn't depend at all on the extra income from the hobbies, so those should be looked at as separate from the idea of how to save for retirement.

When you paid off your house, did you literally have 100+k to give to the bank? What was the process of getting your mortgage off your back?

A: Mr. Money Mustache

Sometimes, I have paid off houses with lump sums (like, if I sold some stocks), but most of the time you just make extra payments, whatever you can handle each month, to the bank. Every payment drops the rate of interest accrual, so you get further and further ahead. Eventually, the balance becomes zero and you are free.

What importance do you place in having a skill, for example construction or carpentry, that translate into not only saving money at home but being an independent contractor?

A: Mr. Money Mustache

It's not essential to early retirement (that is just a numbers game - you amass 25 times your annual spending in some stock index funds, and you're done).

But for me, carpentry is essential for a fun life, just because I love building things. And it definitely contributed to my own ability to save a little faster while working, and to live a little cheaper by maintaining my own house and rental house.

How are you able to eat a paleo-type eating plan on the budget you list for food?

A: Mr. Money Mustache

By not eating too much meat (but plenty of eggs) and using heathy fats as a big source of calories (which, counterintuitively seems to make most people lose bodyfat if combined with a low-grain/low-sugar diet). Also, bulk buying at Costco (or Aldi if you have it).

Hi Pete,
Awesome article in the Post...totally inspiring.
I don't want to retire early (I love what I do), but I want to have greater financial independence.
Beyond employer-managed retirement packages, I've never invested in any type of stock or mutual fund, but I would like to start making more of my money work for me. If I have say $400/month to invest with, what would you recommend? Should I just put it into my savings account? Thanks!

A: Mr. Money Mustache

Ack! savings accounts! I have never even HAD one of those things, because they are like stuffing your money into the mattress - the little green employees are idle instead of working for you.

For ultimate simplicity, open an account at Vanguard.com, and invest in the Total Stock Market Index Fund. International Stock fund, and Small cap value index fund. Meahwhile, read some John Bogle books to understand more about why this is a good idea :-)

When I was in college, I didn't have a lot of money and didn't mind sharing a small space with a roommate. When I graduated, got a job, and my first apartment, I suddenly had more income to live on. It was easy to expand my spending to include more trips out to dinner or to the movies. I never spent more than I made, but as my income increased, so did my spending. I know that if I instead of moving into a larger place, going out more often, and spending money on the things I didn't really need, I could have saved a lot more money. I think that once you get comfortable with the things you have, it is hard to imagine scaling back and living in a smaller home, driving an older car, and stopping going out to dinner or the movies. Once you have, it is hard to have not. How can someone who is used to having and spending $50,000/year supposed to cut back to just $25,000/year without feeling like they gave up too much?

A: Mr. Money Mustache

I think the first step is to understand that the money-spending is probably not the source of your happiness. And to be inspired by the challenge of trying to find a better way to meet your needs.

Once you view it as a positive challenge rather than a negative deprivation, you lose your fear of trying new things. Remember, you're not the first person to take this adventure, and most people who do it report great satisfaction.

high deductible insurance, while an excellent product that is great - is being phased out under obama care....just an FYI

A: Mr. Money Mustache

It's not being phased out, just softened at the edges a bit. I bought my policy recently, after some of the Affordable care act changes already went into place. In general, my own research indicates the ACA will benefit rather than harm early retirees.

Hey MMM! - I'm in a situation where I changed jobs and had to move (within biking distance to the job). I'm wondering what your opinion is on selling my house at about a 5k out of pocket expense vs. renting it out and having potential high cost items in play (25 year old furnace, inground swimming pool). The rent would just cover my P&I, Taxes and Insurance, so there wouldn't be any income from it. I'm leaning toward selling.
Matt

A: Mr. Money Mustache

In general, experienced landlords would consider that house a poor choice for a rental. Good rentals should generate positive cashflow, even if you have no equity (i.e., a 100% loan balance). Look for monthly rent at least 1% of the value of the house (i.e., a $150k house renting for at least $1500).

My husband and I have much different approaches to work and to retirement. He loves his field and plans to keep working forever (or, at least until he is really, really old). Until we got married last year, he wasn't saving for retirement at all. I don't expect to retire earlier than normal but I definitely want to be able to retire, and to have enough money saved to have the freedom to decide what I want to do and when I want to retire.
Our current plan is that I will contribute a healthy amount to my retirement accounts and a small amount to his, but this makes me somewhat uneasy. What to do?

A: Mr. Money Mustache

I sometimes hear from couples in this situation, who have different philosophies and thus agree to separate their finances a bit. This can be healthy - you can save in a hardcore fashion for your own retirement, and encourage him to handle his own separately. Over time, you might drift closer together if you're lucky, as my wife and I have.

After losing a bunch of money in the 2008 stockmarket crash, Im extremely wary about getting back in. Does the up/down and Wallstreet bad behavior worry you if you depend on this income? Also, are you an active day trader or just living on dividends?

A: Mr. Money Mustache

Your question illustrates exactly how NOT to think about the stock market!

In 2008, I was as excited as a little kid, because all the stocks suddenly went on sale. I sold absolutely nothing, and bought as many as I could. Right now, I'm actually a bit unhappy about the stock market scene, because valuations are so much higher. Oh, for another stock market crash.

I look at stocks as something to hold for a lifetime, living off of only the dividends and a TINY amount of sale of the top-line appreciation each year, to generate a 4% withdrawal rate.

I would never recommend active day trading to anyone. It is fun, but statistically a losing game.

Good Morning!! How many hours of hobby/work do you do on average? One issue I feel is figuring out how to keep myself occupied once I retire. Do you volunteer much too?

A: Mr. Money Mustache

I'll admit it right now: I love to keep busy, and my wife sometimes thinks I'm a little crazy for it. I spent the winter building a vacation suite for an MMM reader in Hawaii - for free - , because that's my idea of relaxation!

During the school year when my son is in class from 9-3, I use some of those hours to build things and write on the blog (as I'm doing right now!). Probably about 3-4 hours a day, so 15-20 per week. The rest of the time, I'm with the little boy - riding bikes, making stuff, reading books, or whatever. I do get a chance to volunteer at the school too, but that has only been one day per month this year.

I've just become acquainted with you and look forward to learning more, so forgive me if there are old questions: Have you done a financial plan so you'll have the $$ you'll probably need for health care when you're older? It's amazing to think that by 30 you put away enough so that it'll compound to what's needed by 60, 70, 80, 90. Thanks!

A: Mr. Money Mustache

Instead of thinking about the future value of investments, I like to think about current annual cashflow. Right now, our investments produce somewhere around $40k per year, but we're only spending $25-30k, including all healthcare costs. I don't expect that to rise over time, and Medicare kicks in at age 65, which may even lower costs.

An important thing to note is that the US has the highest medical costs in the world right now, and yet we have one of the most efficient capitalist economies. I will even go out on a limb and make a crazy bet that over the coming decades, we will see price decreases rather than increases in the cost of staying healthy.

MMM, do you use Portfolio Margin as part of your trading strategy? As you probably know, you can withdrawal this increased margin availability and invest it elsewhere.

A: Mr. Money Mustache

Definitely no margin in my investing strategy, other than the fact that I keep a line of credit open on my house (current balance zero) in case a great deal on another rental house ever comes up. These days, I prefer low risk and simplicity over higher returns.

Curious how you'll teach your son about your lifestyle. Will you help him sketch out a ten year plan of working a full-time job (20-30 yrs old), then retire like you?

A: Mr. Money Mustache

Great question! In our lifestyle, it's hard not to soak up the message automatically because we talk so openly about money, investing, the philosophy of not wasting things or trashing the planet, etc.

He already knows about the Mr. Money Mustache blog, and what it's about. After all, his parents don't work, while everyone else's parents do. By age seven, you can't have such a different lifestyle without the kid asking some questions.

I'll support him whatever he decides, but I have a feeling he'll end up financially independent earlier than I did, even if I don't give him any money myself :-)

Hi there,
We are pulling up the front lawn (which creates maintenance expenses and requires chemicals) and putting in a garden. My husband read your article and said, See, Mr. Mustache wouldn't be spending money on this. But isn't there a place for beauty -- something that will bring you peace and pleasure every time you walk through and see a new bloom or bud? Yes, it will cost money. What say you?

A: Mr. Money Mustache

I agree - I think your husband is mis-quoting Mr. Money Mustache! I am actually pretty aesthetically oriented, which is why we live in a fancy house with many gardens, and why I still build extravagant things for family and friends. Your home is your castle.

But if you do it with a do-it-yourself ethic, shop carefully, and do your renovations with an eye for what will increase the value of the home when you eventually sell it, it can be a money-producing rather than money-losing hobby.

Hi MMM! Did you leave Canada only because of the high taxes? What do you think of living in a country with a lot of taxes? Do you think you could have achieved early retirement in Canada?

A: Mr. Money Mustache

No! I definitely didn't leave Canada because of taxes. In fact, in that country you get much of it back in the form of cheaper higher-education and free healthcare.

In 1999 when I came here, engineering salaries were almost double what they were in Canada, so that was a major factor. Since then, Canadian salaries have caught up. Some of my peers who stayed in Canada when I left are now almost ready for early retirement themselves, so while it took them a few years longer, it is still feasible.

But the biggest reason is the weather: Because I ride bikes every day and like working outside, I love sunshine and semi-desert climates. My part of Colorado has been great for this, and eventually I might even move to San Diego for a later stage of retirement.

At what point does a couple know when it is right to buy a house instead of rent? Right now, my wife and I have around $80k in student debt, but are making around $150k salary combined. We can quickly accumulate cash for a down payment or we could kill our debt quicker. Which would be most Mustachian?

A: Mr. Money Mustache

If you live in an area of the US where houses are still on sale due to the housing crash, it might be wise to get the house first. If your city is expensive, take a year to wipe out that $80k debt, then get a huge downpayment together, and you will have much greater leverage and flexibility as a buyer.

Isn't retirement in your 30s isolating? Most of your friends must still be at work from 9 to 5. I'm sure you keep busy, but how do you find companionship outside of your family during the day?

A: Mr. Money Mustache

It's not isolating at all! I have mostly friends who are entrepreneurs or creative types with random work schedules. So we can work on projects during the day, or just take off for random bike rides. Plus, there's getting groceries, finding time to do some writing or read a book or get some exercise. Plus, my wife is at home too. Overall, the weekdays seem too short rather than too long!

Most of my life these days is spent with my son, who is only in school from 9-3 on Monday to Friday.

Do you travel at all, and if so, what are your tips for frugal traveling?

A: Mr. Money Mustache

We travel at least 3 months out of the year. My top tip is to stay with friends and family and/or find other ways to live like a local when traveling. As opposed to taking the traditional tourist route of hotels, guided tours, shopping, etc., which is not really traveling anyway.

I know he's not quite there yet, but private colleges in the US cost over 50k per year. Would you put your money into this kind of massive expense? Send him off to Canada, where college is c-h-e-a-p? Choose a public US university?

A: Mr. Money Mustache

Yeah! A public, in-state university is a perfectly good choice at about $7k per year. Sure, we could afford the fancier ones, but why? (plus, full scholarships are widely available to the higher-end ones anyway if a student is sufficiently talented/motivated)

I've found that as I get older, I'm more willing to skimp in some areas, but not others. I'll eat rice and beans and spaghetti seven days a week and drive a fifteen year old car, but I've also discovered consignment shops and estate sales as great places for deals on the finer things.

A: Mr. Money Mustache

Sounds like a pretty good strategy! In rich countries like the US, frugality does not mean material deprivation. For example, I have a ridiculously awesome set of power tools and an extremely impractical fancy audio system and too many musical instruments, because I love building things and music. But these things cost less than most people spend on commuting or restaurants in a single year.

It seems with your lifestyle, I would have assumed you would homeschool your child (to be more free, I suppose), is that a consideration?
Do you travel a bunch? I would love to be able to travel more - but well, we don't, it's expensive (and I don't want to be backpacking and staying in hostels - too old!). That is what I would want to do when I 'retire' however I would be able to do it...

A: Mr. Money Mustache

Home schooling is a neat idea, but to be honest, my wife and I are wimps: we love the free time between 9-3 every day to pursue our hobbies and get the groceries, and we like the idea of having our son mingle with ordinary kids from the neighborhood and deal with various rules and teaching styles, which he would not get as much with homeschooling.

Sounds like you live in a rural community. Was it important for you to move to a rural location in the US? Is this the only way to afford your home and live cheaply as you do? (I like the country, but wondered if others could do this in an urban area)

A: Mr. Money Mustache

No, we live at the center of a city of about 100,000 people, which itself is just 40 miles outside of metro Denver, with a population of several million. We also have a relatively expensive house, at over $400k.

However, people pursuing a more extreme early retirement strategy could locate to cheaper areas, like suburbs of Phoenix, Reno, Las Vegas, Dallas, etc., where houses are under $100k!

I am working on paying off student loan debt and would like to start saving and investing after that. But, would it be best to work on paying off my mortgage first before investing? Do you consider mortgage "emergency debt"?
What do you advise in this situation?

A: Mr. Money Mustache

I don't lump mortgages into the emergency category, especially if the interest rate is under 4% and you have no PMI premiums due to a sufficient downpayment. So, if you enjoy stock investing, go for it!

Hello MMM,
just want to endorse your website - it is readable, hilarious, and sensible (rare combination)! I think even those of us who live in your hated eastern megalopolis can enjoy and benefit from your outlook.

A: Mr. Money Mustache

Aww, thanks a lot. And for the record, I don't hate your Eastern Megalopolis.. I just like to encourage people to at least learn about the world beyond the borders of their own city - promotes a feeling of freedom and choices, and also may serve to streamline the economy a bit as people and work opportunities will be able to connect more efficiently.

You note that you now live 1500 miles from your childhood home....do you have close family nearby? That is why our family could never achieve what you have.....we choose to live near grandparents, cousins, aunts and uncles-in one of the most expensive areas in the country! But I wouldn't trade it for all the money in the world.

A: Mr. Money Mustache

Our tradeoff is spending two months living with them every summer, and having them visit us (and take advantage of the better weather here) every fall or winter. It has been wonderful, and we are closer than ever! But I agree - family bonds are wonderful and not to be neglected.

If you are a Canadian citizen, don't you have that comprehensive, nationalized health care system as a back up? Your insurance seems unusually cheap. I live in the DC area, and my family's premiums cost nearly 1,000 per month -- and that's the best deal we could find for 5 healthy people.

A: Mr. Money Mustache

Is that for a similar $10k deductible like my plan has? I find that the deductible has a huge effect on the premiums.

However, I also find that insurance prices (currently) vary greatly from state to state. Over time, the affordable care act has a chance to improve this. Illinois is one of the cheapest, for example. Just another thing to consider when deciding where to live.

My wife and I have been living a similar lifestyle to yours for the past four year (we're also in our 30's). Our financial calculations are different but ultimately we dont work full-time jobs, have a rental property, and spend our time SCAVENGING.
I think this is a very important part of this lifestyle. With all the wealth in the US generated since the 1950's, there's a tremendous amount of stuff being thrown out. As you've said on your blog, now that we have the time...Craigslist is our best friend. We live high in the horse buying awesome stuff people are basically giving away.

A: Mr. Money Mustache

Neat hobby - and I agree, Craigslist is a great ally in living well for less. My suite of high-end stainless steel kitchen appliances, for example, was $1500 TOTAL from a big spender who was upgrading to the newest style even though these ones were nearly new!

I'm struck by how much time you spend with your son. There was a time when just about everyone worked from home, so families spent a lot more time together. In this sense, the amount of time you spend with your son is a throwback to an earlier era, and I'm sure it will give him a good grounding, not just in your lifestyle, but also in the relationship he has with you and your wife. I'm a little puzzled, though, why you don't spend more time volunteering. There are so many people in need, and it sounds like you have a lot of skills to share with others.

A: Mr. Money Mustache

Thanks! I love having a close family relationship, and this comes first for me.

As for sharing with other people.. maybe the way I could do this best would be to start a BLOG, so I could work with thousands or millions of people, rather than just one or two in person? ;-)

Hello M cubed! I have a DC rental (my condo that I lived in before marrying) that, instead of providing an income, generates a loss each year. I charge a rent that is as high as the market will bear. However, with mortgage payments, condo fees, repairs, etc., I can't seem to make any money. Do you have any thoughts for how I can make my rental into an income generating investment? Thanks.

I read your recent article about low interest rate car loans when dealing with buying new. It appears your primary concern is spending more money on a new car because of a lack of self control. Assuming you were to spend a nearly equivalent amount, would you recommend 0% loans and a new car, especially when considering warranties, longer usable life, etc..?

A: Mr. Money Mustache

No.. because I have never seen an example of a new car being a cost-effective way to get your transportation. A good used car is always a better idea, from all the calculations I've done so far. I admit it does take a bit more research, but for non-millionaires it is time well spent.

that the 'old' idea of retirement - is craziness. Especially when people - even if they 'retire' at 65 - have so much more to give to the world.
The idea of sitting around and playing mah jongg....well, who wants to do that? if you're generating income - good for you (my aunt was complaining about not getting enough in interest in the CD that just matured). You're doing what you want to do...go for it.
(remember, when the 'retirement age' was set - 65 was life expectancy. no was really supposed to 'retire')